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Deutsche Bank to pay $550 million in tax fraud probe

NEW YORK (CNNMoney.com) -- Deutsche Bank AG agreed Tuesday to pay more than $550 million for taking part in fraudulent federal tax shelters, according to U.S. regulators.

The German bank admitted wrongdoing "in connection with its participation in financial transactions which furthered fraudulent tax shelters that generated billions of dollars in U.S. tax losses," the United States Attorney of the southern district of New York said in a statement Tuesday.

The $553.6 million fine represents the money Deutsche (DB) collected through its participation in the tax shelters, the taxes the IRS was unable to collect from taxpayers involved in the scheme, as well as a civil penalty of more than $149 million.

Under a non-prosecution agreement with federal authorities, Deutsche agreed to the appointment of an independent expert who will review the bank's compliance.

The agreement marked the end to an ongoing probe into the pre-packaged tax products the bank offered, which the government suspected were tax shelters aimed at illegally evading taxes.

"Deutsche Bank is pleased that this investigation, which concerned transactions that ceased more than eight years ago, has come to a resolution," the bank said in a statement. "Since 2002, the Bank has significantly strengthened its policies and procedures as part of an ongoing effort to ensure strict adherence to the law and the highest standards of ethical conduct."